Portugal and Angola approve debt pardon for Sao Tome and Principe

23 August 2007

Lisbon, Portugal, 23 Aug – Portugal and Angola, two of the biggest bilateral creditors of Sao Tome and Principe, have approved the pardoning of the debt owed by the West African archipelago, the advisor to the Sao Tome Minister of Planning and Finance, Zeferino Seita, said Wednesday.

Contacted by phone by Portuguese news agency Lusa, Seita said that there was already “an agreement in principle” with Angola, the archipelago’s main lender, to drop a debt of around US$22 million.

Seita said that “negotiations continue” between the two countries, particularly in terms of technical work to calculate the exact amounts owed.

In relation to Portugal, Seita said a verbal agreement had already been reached for a debt pardon of around 10 million euros.

On Tuesday Germany made its debt pardon of 4.6 million euros for the archipelago, thus making it the first Paris Club member to do so.

In June the Paris Club, which represents 19 countries, wrote off almost US$24 million in debt and committed to negotiate the remaining 13 percent owed, through bilateral contracts.

Total debt to bilateral creditors currently totals US$80 million, whilst Sao Tome and Principe now owes the Paris Club almost US$1 million, as in March the total debt owed to the World Bank and the International Monetary Fund (IMF) was entirely written off.

This year, debt servicing is expected to fall to between US$3 and US$4 million, which is a fifth of the total tax revenues of Sao Tome and Principe and around half the amount paid each year before the debt owed to the World Bank and the IMF was dropped.

Sao Tome was until last year the most indebted of the Portuguese-speaking African Countries (PALOP), with a debt level equivalent of 1,655 percent of its goods and services exports, between 2002 and 2004, according to figures from the World Bank. (macauhub)